Russia had been plagued by the worst droughts in at least 50 years and led to the withering of million of acres of wheat, causing the government to introduce the ban on all exports of grains. With Russia being the world’s third largest producer of wheat, the ban in exports led to the hike in wheat prices across the globe. The move by the Russian government was seen as necessary to prevent a domestic escalation of food prices.
The shortage in global wheat production is further aggravated by bad weather conditions in other parts of the world. For instance, dry weather in Kazakhstan, the Ukraine and the European Union, and flooding in Canada have damaged crops and caused a 91% surge in wheat prices in Chicago since June 9, 2010.
Prices are now at their highest since August 2008, where the spike in food prices was a contributing factor to the food riots from Haiti to Egypt. The United Nations food price is 22% lower than the record set in June 2008 but it is estimated that the current pricing is 13% higher, relative to that in 2009.
Hence, pricing of agricultural output are often subjected to constant checks so as to avoid and ameliorate the impacts of inflation on the prices of food. Food pricing is crucial as it influences the affordability of food to the people. Situations of high food pricing could lead to negative repercussions such as malnutrition, food shortages and starvation.
